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What is your perceive our democratic process works? It could be along the lines of this. Citizens choose MPs. They legislate on bills. If a majority is achieved, the bills are enacted as law. Statutes is upheld by the courts. Simple as that. Well, that used to be how it operated in the past. No longer.

The Advent of Secret Tribunals

In the modern era, international firms, and the wealthy individuals that control them, can sue elected administrations for the regulations they pass, at private courts staffed by commercial attorneys. Such disputes take place in secret. Unlike our courts, these panels grant no opportunity to appeal or oversight by judges. You or I are unable to file a case to them, nor can our government, including businesses headquartered in this country. They are open exclusively to corporations based overseas.

Should an arbitration panel determines that a law or policy might diminish the corporation’s projected profits, it can award compensation of vast sums, potentially billions.

These sums are based not on real financial harm but compensation the tribunal officials conclude the company would perhaps have made. The state may have to drop the legislation. It will be discouraged from passing future laws in that area, worried about incurring a lawsuit.

A Process Running Rampant

Historically high figures of legal actions are being initiated, as companies observe each other, and hedge funds fund legal actions in return for a portion of the takings. The result? Sovereignty and popular rule are turning into too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump national legislation and the rulings enacted by elected bodies is that this clause has been inserted – absent public approval, and frequently under an atmosphere of profound opacity – inside international trade agreements.

A Specific Example: The UK Coalmine

A year ago, environmental campaigners secured a significant win at the High Court. The presiding officer found that proposals to open the first new deep coal mine in the UK for 30 years, in northwest England, were unlawfully approved by the previous government, which had endorsed the extraordinary assertion that the mine would have had no impact on climate commitments. The incoming administration then withdrew the permission the previous administration had issued. Today, this success is under threat by an secret arbitration panel reporting to no one but the entities petitioning it.

During August, a company whose beneficial owners are located in the offshore financial centre lodged a claim versus the UK government. Recently a tribunal in the US capital was set up to hear it.

This firm is suing the UK for the money it might have made if the mine had been allowed to go ahead. We have no clear indication how much this could amount to. Who is acting on its behalf against the UK administration? A member of parliament, and ex-law officer in the previous government, that great patriot the MP. The government makes a decision, the domestic court upholds it, then a foreign company disputes it through an unaccountable private court, and a sitting MP represents its behalf.

A Sanctions Case

Concurrently that the tribunal on the coal mine dispute was convened, it was revealed from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, Mikhail Fridman. Details are scarce of the case at present, but it appears probable that he’ll use the ISDS mechanism to challenge the sanctions the UK enacted against him after the invasion of Ukraine. He has started suing Luxembourg for this reason, claiming sixteen billion dollars: equivalent to half of nation's yearly budget. Part of the legal team representing him there? Cherie Blair, married to the ex-UK leader.

International law scholars believe that the EU’s hesitation in utilising seized Russian assets as guarantee for its loan to Ukraine stems from concerns within Belgium that it could be sued in the offshore corporate courts, under a bilateral investment treaty. This extraordinary, undemocratic power over democratic administrations may be obstructing the money Ukraine desperately needs.

False Assurances and Escalating Risks

Politicians promised that these events were not possible. Previously, a government leader, advocating for the biggest and most dangerous of all these agreements, told us: “Britain has agreed to trade agreement after trade deal and there has not been a case in the past.” An expert on this matter described activists of “exaggeration … the truth is, ISDS has little impact on the UK much”. The prevailing narrative seemed to be that only poorer nations should be concerned by such legal actions. Predictions that “as corporations begin to understand the influence they’ve been granted, they will shift their focus from the weak nations to the wealthy nations” were met with general mockery.

That prediction has come to pass. In the current period, fossil fuel and resource corporations have filed a historic level of claims against nations across the economic spectrum, opposing – as in the case of the UK mine – official measures to halt environmental catastrophe. Companies have thus far won $114bn through ISDS, of which oil majors have obtained the majority. That is equivalent to the combined GDP